from the well-that's-convincing dept

We recently looked at the mysterious report coming out of Australia that suggested unauthorized file sharing was costing the economy $900 million per year. But after digging into the details, it became clear that this number was a complete fabrication, as it applied the same totally debunked methodology that was used in last year's TERA report in Europe.

However, reader Ivan lets us know that the author of the Australian report, Emilio Ferrer is now defending the report and its results. Except, his defense seems to suggest he doesn't realize what everyone is complaining about. He focuses on the $900 million number, and notes that of course that's not the actual loss number, but says that it's okay, because he also offered other "ballpark" figures and the actual number must be somewhere in there:

"I've applied the methodology to countries that yield the highest and lowest level of impact," Ferrer said.

"There are variables that are difficult to measure but whether you apply to the lowest country or the highest country the impact is between $500 million and $2 billion."

But Ferrer said such "technical" analysis was indicative only of a "ballpark" figure.

"When you apply business modeling and the average and end up concluding the impact was $900 million, of course the answer is not $900 million but we try to deal with that by looking at the range.

"The conclusion is there is a significant loss to economic activity and therefore jobs as a consequence of internet piracy."

But all of this ignores the main point: that the basic methodology he used for any of those calculations wasn't sound. People aren't complaining about the results. They're complaining about the methodology itself. And he doesn't seem to get that at all because he doesn't defend it at all.

I mean, look, I could use some bizarre fantasy methodology to claim that every time someone falsely claims that file sharing is theft, it means that a puppy gets kicked. And then, if people challenge me on that methodology, I could just say I didn't mean a puppy got kicked every time, but the methodology suggests that somewhere between 0.5 and 2 times it happens, a puppy gets kicked. But, of course, that's stupid. If the underlying methodology makes no sense, then the results make no sense. Just because they give you a range, doesn't make it any more justified that you used a bogus and debunked methodology.

I think it's important to criminalize the behavior of 5 million people in order to save 8000 jobs. Just think about it for a second: if we criminalize the behavior of 5 billion people, why, we could save 80,000 jobs!

It is categorically impossible for piracy to remove value from the economy as it is a creation (duplication) of things.

A fire that burns down homes, the cave in of a mine, the explosion of an oil well. These things can remove value from an economy as they either destroy scarce resources or or force the application of scarce resources to get back to a previous state.

It's theoretically possible that piracy could completely wipe out the entertainment industry (although there is zero evidence that is happening), but that doesn't remove value from the economy. Resources that would have gone towards that industry didn't disappear they go elsewhere.

Interesting defense...

That's quite the slight-of-hand defense if it works on anyone.

- We are losing $900m per year!
- What? The way you came up with that number is wrong.
- Well, I did not really mean $900m - the results of my study actually showed it was a range of $500m to $2b and by some really complex calculations, I have concluded that is best represented by $900m
- Oh?...Umm...yeah, I guess that makes it ok that you made all of these numbers up by taking numbers we know are incorrect and applying some made up multiplier.

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If I pirate a movie, I not only am not paying for it, but my time is being used up pirating/downloading+watching a movie where I might otherwise be spending my money elsewhere.

Piracy in this case is a "lost opportunity" for revenue creation at the expense of the creator of content.

The problem is in many cases pirates simply have no opportunity to spend money on the content they want, at any price, so they seek pirate methods. The problem ultimately boils down to the industry should put forth 100% efforts to give customers what they want at the price they want it. Every second of delay is a lost sale/opportunity.

I stopped pirating games when I started simply using steam sales as my "opportunity cost." I basically said Steam games under $10 are worth it to me, because I get more than the game, I get the convenience of having steam on every computer I use.

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It is categorically impossible for piracy to remove value from the economy as it is a creation (duplication) of things... that doesn't remove value from the economy. Resources that would have gone towards that industry didn't disappear they go elsewhere.

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I will say I hadn't considered the time 'spent' being entertained by pirated materials. It's maybe sorta possible that time could be considered 'wasted' and a potential loss to the economy. It's certainly an interesting thought game.

Although I think in order for that to work out it would have to be the case that more productive use of their time would have ensued.

On the flip side if you can say more productive use of that time would have ensued you might be able to argue the entire entertainment industry is a drain on the economy. :)

BTW I also love steam. It would say, in general, it's digital done right!

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I will say I hadn't considered the time 'spent' being entertained by pirated materials. It's maybe sorta possible that time could be considered 'wasted' and a potential loss to the economy.

Yeah, that is an interesting line of thought.

On the flip side, though, if time wasted on pirated on materials is to be factored in, then time wasted on legitimate purchases that ended up being utter trash should be counted against the other side too.

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Do you have any copyrighted images on your hard drive? Have you ever discussed an NFL or NBA game without express written permission? Have you ever taken a photo and captured a trademarked image? Thief! I call thief! I'm personally sick of people like you watering down our language. Piracy is not stealing, it's note even piracy really. Copyright infringement is a crime, but equating to actual theft is disingenuous at best, and deliberate obfuscation at worst.

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Oh and as a "poindexter" who makes the internet run...you're welcome on behalf of all of my nerdy brethren. And if logical reasoning and economics says something isn't true...it just may be possible. Now get back to whatever it is you nerd-bashers do and leave the real work to the geeks.

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"If I pirate a movie, I not only am not paying for it, but my time is being used up pirating/downloading+watching a movie where I might otherwise be spending my money elsewhere."

You have to compare it to the legitimate alternative, though. And often, though certainly not in all cases, pirating something is faster and more convenient. So it can actually end up saving time. And the money isn't a factor, since while you could have used it, yes, you still have it and will use it at some point. The fact that you didn't use it while pirating is meaningless.

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Ballpart technical analysis

But Ferrer said such "technical" analysis was indicative only of a "ballpark" figure.

I cannot understand using the words "technical analysis" and "ballpark figure" in the same sentence. There is nothing technical in coming up with a ballpark figure - unless of course you are building ballparks.

Reminds me of an old saying: If you need statistics to prove anything, chances are it was not true to begin with.

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> categorically impossible for piracy to remove value from
> the economy

This is brilliant. It is like the reverse of the Broken Window Fallacy (BWF).

Some idiots actually claimed that the destruction in Japan would help "stimulate" their economy. This is classic Broken Window Fallacy (where a kid breaks a window and everyone is mad until someone points out it creates work for the glazier and praise the kid). Of course, destruction may increase GDP but it never increases wealth.

But think of it in the reverse. If the kid could somehow duplicate the window, would that somehow "deprive" the economy? This is the claim that people who say piracy hurts the economy are saying. This is just the BWF in reverse. Sure, the glazier (or media companies) might be pissed off, but there is _no way_ it could make the whole economy worse.